Airport Cities Need Public-Private Partnerships News Feed

By Alejandro Schwedhelm

August 20, 2015—Globalization and world travel have turned airports into magnets for economic growth. Public-private partnerships (PPPs) make it possible to fully realize that growth through a purposely organized, integrated urban environment known as an “airport city”[1] or “aerotropolis”—a term first coined by Nicholas DeSantis in a 1939 issue of Popular Science.

View of LA from airplane

Beginning the approach: New urban areas will radiate from airports. Source: Jay Mantri

An airport city arises on undeveloped land surrounding an airport to take advantage of the business it naturally generates. This new urban area may consist of logistics and manufacturing sites; office blocks; mixed-use commercial and residential buildings; doctors’ offices, clinics, and even hospitals; hotels and convention centers; and entertainment and theme parks.[2] The airport city produces jobs and tax revenue in addition to significant revenue for the airport authority leasing the land.

Taking Off from the Ground Up

Airport cities underscore the historical truth that the economic success of a city depends largely on transport connections with other large economies. Airport cities have grown and thrived on the outskirts of older cities like Amsterdam, Frankfurt, Hong Kong, and Vienna that already had extensive means of commerce by highway, rail, or waterway. Others have been planned and developed from the ground up with airports as the first—rather than the last—critical transit link. The airport city of Songdo, Korea, for example, attracts multinational and domestic corporations that benefit from proximity to Hong Kong and Singapore.[3] The airport itself services more than 40 million passengers each year and the airport city is still growing.

PPPs Are Key Elements

To guide the development and growth of airport cities, government authorities need master plans. Among other things, such plans establish street grids and assign land-use types to each lot over the short, medium, and long term—preventing sprawl and enabling airport-related businesses to interact and operate efficiently.

But plans will not get far without private investment in the infrastructure of airport city components, including the airports themselves. Many governments, particularly in developing countries, lack the capital and institutional capacity for planning and financing large infrastructure projects. A well-structured public-private partnership can fill this gap, enabling governments to share risks and costs with private sector investors, who, in turn, profit from operating projects.

These partnerships, in which Nathan Associates specializes, often require developing legal frameworks and institutional arrangements and always involve complex transactions with multiple investors. Nathan, for example advised Brazil’s Ministry of Economic Development on the plan for financing proposed expansion and modernization of the Tancredo Neves International airport and its cargo and logistics facilities in Minas Gerais.  The increased capacity of Tancredo Neves is expected to spur more development in the area covered by the Belo Horizonte Aerotropolis Plan--a radius of 20 kilometers—about 12 miles—around the airport.[4]

In my next post I’ll describe the exemplary airport city surrounding Denver International and how PPPs are key to its success.

Alejandro Schwedhelm is a Nathan Associates specialist in multimodal transport, transit-oriented development, and international development. As an associate with the firm, he provides technical and analytical support for airport-related land use planning and policy. He has a master’s in urban planning from New York University and a B.S. in environmental spatial analysis from the University of North Georgia.

[1] In the past 15 years, many experts have referred to development within airport property as “airport city” and development beyond that property as “Aerotropolis.” In this post and the next, "airport city" refers to development within and beyond the airport property.

[2] Kasarda, John D., and Greg Lindsay. “Aerotropolis: The Way We'll Live Next.” New York, NY. Farrar, Straus and Giroux, 2012.

[3] “Why Songdo: A Global Business Hub.” Songdo International Business District. 2009.

[4] “Belo Horizonte’s new airport saved by concerted government and private sector strategic decisions.” CAPA Center for Aviation. November 12, 2014. (scroll down)

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